House prices up 0.5% - Nationwide

House prices jumped by 0.5% month-on-month in January, in a further sign that the market is picking up, Nationwide said.

The increase follows two months of no movement and means that average prices now stand at £162,245.

Prices are flat compared with a year ago, but lenders and estate agents have predicted that the market will continue to slowly improve this year amid evidence that Government efforts to boost lending are having an effect.

The Council of Mortgage Lenders (CML) recently reported an increase in lending to first-time buyers, which should also help some home owners who are looking to sell their home and trade up.

The Government launched its Funding for Lending scheme in August, which aims to unclog the flow of credit by giving lenders access to cheap finance.

Lenders have been slashing their rates and the number of mortgages on the market has increased since the scheme started.

The Bank of England reported on Wednesday that mortgage lending to home buyers last month was at its highest for nearly a year.

Robert Gardner, Nationwide's chief economist, said: "There have been tentative signs of a pick-up in activity in recent months. The Funding for Lending scheme has achieved some success in bringing down mortgage rates, with some signs of a pick-up in lending activity.

"Hopefully, the momentum will continue to build in the months ahead, though much will depend on whether the wider economic environment improves."

The building society's latest study said that despite the improved mortgage market, first-time buyers still typically need to put down a 20% deposit, compared with 10% before the financial crisis.